Land Securities buys stake in Bluewater

Land Securities has bought a stake in one of the UK’s best performing shopping centres, Bluewater in Kent, for just under £700m.

It has bought a 30% stake in the mall for £656m, and the full asset management rights for the 1.8m sq ft centre and 110 acres of surrounding land for £40m, both from Lend Lease. The overall net initial yield after expiry of rent free periods is 4.1%.

The investor said it would focus on reducing the 5.3% vacancy rate at the scheme, including creating bigger and fewer retail units, which it says are more attractive to retailers.

The remaining stakes are owned by the Lend Lease Retail Partnership which controls 25% of the asset, M&G Real Estate and GIC which own 35% and Hermes and Aberdeen Asset Management which has 10%.

Bluewater attracts 27 million visitors a year and its catchment is one of the most affluent in the country. It comprises more than 330 retailers, cafes, bars and restaurants, including Marks & Spencer, House of Fraser, John Lewis, American Eagle, Victoria’s Secret, Tommy Hilfiger, Jack Wills, H&M and Zara. It also includes 13,000 parking spaces.

Scott Parsons, managing director of the retail portfolio at Land Securities, said: “The acquisition of this interest in Bluewater is part of the continued strategic shift of our retail portfolio towards dominance, experience and convenience.

“We see opportunity to improve returns at Bluewater by reducing the void rate of 5.3% in line with our retail portfolio average of 2.6%, combining units to provide fewer, bigger units which are more attractive to retailers, and improving the leisure and catering offer. We are confident that our fresh approach to asset management together with the south east’s strong economy will deliver rental growth as market confidence returns.”

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